International presence

More than a decade of international growth

IBERDROLA has undergone a profound transformation since the beginning of this century, allowing it to become Spain's largest energy group, one of the five largest European electricity companies by market capitalization and the world leader in operating wind energy. The Group has achieved total installed capacity of 45,000 MW and has 32.6 million supply points providing energy for some 100 million people around the world.

This positive evolution has been made possible thanks to a strategic vision that has enabled IBERDROLA to anticipate the needs of the energy sector. Over the coming years, the company will continue to develop its sustainable, long-term business model. To that end, it will continue to undertake its investment programme totalling €11.2 billion for the 2014-2016 period, primarily earmarked for the areas of electricity transmission and distribution networks and renewable energies within its flagship markets.

IBERDROLA´S success is due to its strategy developed in three stages:

2001-2006: planning focused on energy business growth principally in Spain and Latin America, with the company succeeding in doubling its size and profits by the end of the period. Installed capacity rose to 30,500 MW from 16,500 while net earnings came to €1.66 billion in 2006.

2007-2013: strategy has been marked by strong international expansion, with the integration of ScottishPower, Energy East (today Iberdrola USA and Brazil’s ElektroNote (*), as well as managing a significant growth of renewable energy activities where installed capacity stands at nearly 14,250 MW.

2014-2016: in 2014, Iberdrola continued to make concerted efforts in optimising the entire Group's operational and financial management in order to continue advancing in fulfilment of the objectives established in the 2014-2016 Outlook approved last year.

Thanks to this international diversification, IBERDROLA today combines a talent pool that brings together different cultures, languages and traditions, which faces the future as a single and great team.

Focus on markets with stable and predictable regulation

IBERDROLA will carry out an intensive investment programme between 2014 and 2016 amounting to a net €9.6 billion (gross €11.2 billion) focused on projects and countries enjoying stable and predictable regulatory frameworks.

Of this amount 46% (€4.4 billion) will be allocated to new infrastructure and the remaining 54% (€5.2 billion) to maintenance and improvements.

The Company will allocate the largest share of investments to the UK with 41%, followed by Latin America (nearly 23%) with most of this in Mexico and the United States (17%).

UK: a period of expanded activity in transmision and distribution, as well as in offshore wind energy projects.

US: growth in networks and in new onshore wind projects.

Latin America: the Company will consolidate its position as the largest private sector generator of electricity in Mexico, while in Brazil it anticipates several years of growth in hydroelectric projects.

Investments will be conditioned on favourable market and regulatory frameworks existing in each country, with a progressive reduction in Spain until the investment climate improves. The negative impact of Spanish energy reforms on Group accounts is projected at €1.31 billion in Ebitda in 2014.

Group investments will concentrate on electricity transmission and distribution with 57% of the total, followed by renewables with 22%, and other generation with 19%. Regulated businesses - networks, renewables and regulated generation - account for 88% of total net investments.

The Company's central goal is to focus on activities with growth potential, and strategy will accordingly centre on:

Generation and supply: growth in this area will come from Mexico and Brazil

Networks: the most significant activity will be in the US, the UK and Brazil, with potential opportunities in Mexico. In Spain, work will continue on smart grids through the STAR project.

Renewables: new installations in he US, UK, Mexico and Brazil

Significant projects during the period

Elecricity transmission: in addition to smart grid development in several countries, IBERDROLA will continue major transmission and distribution infrastructure projects in the US, including the Maine Power Reliability Program which connects to Canada, and the UK with the first subsea HVDC link between Scotland and Wales.

Renewable energy: new wind energy capacity will come on stream during the period through offshore projects at West of Duddon Sands (UK), expected to be commissioned in 2014, and new onshore wind farms in the US, UK, Mexico and Brazil.

Regulated generation: the Company has major developments under way in Mexico to expand CCGT capacity, with recent project awards at Baja California and Norte III and expansion of the Monterrey plant. In Brazil, through Neoenergia in which Iberdrola has a 39% stake, it will start up new capacity at the Belo Monte, Teles Pires y Baixo Iguaçu hydro projects.